Pushing ahead with major reforms, the government of India relaxed foreign investment rules in 15 sectors such as civil aviation, banking, defense, retail and news broadcasting and eased the process for approval of FDI.
According to Prime Minister Modi, these reforms are another example of emphasis on Minimum Government, Maximum Governance. They will ease, rationalize and simplify processes.
Sectors Opened-up for 100% FDI
- Plantations: Coffee, Rubber, Cardamom, Palm oil and Olive oil Plantations
- Media and Broadcasting: Teleports (uplinking hubs), DTH (direct-to-home) and Cable Networks, Non-news and Down-linking of TV channels
- Construction: Management of townships and malls.
Other Reforms
- Norms for businesses such as single-brand retail and private banking are eased.
- The Foreign Investment Promotion Board (FIPB) is allowed to clear proposals up to Rs 5,000 crore, the limit that was Rs 3,000 crore earlier.
- In defence, the government allowed foreign investment up to 49 percent under the automatic route. Earlier this was under the government approval route.
- News and current affairs TV channels and FM radio companies can now bring in up to 49 per cent FDI under the government route compared with 26 per cent earlier.
- With private investment stuttering in construction, the government has done away with entry and exit barriers.
- Government has allowed 74% FII investment in Banking, given fungibility with FDI
- Manufacturers have been allowed to sell their products through e-commerce without government approval.
- Another major booster for companies such as IKEA, a single-brand retail company with 100 percent FDI, has come in the form of dilution in sourcing norms. Earlier, such companies had to ensure sourcing to the extent of 30 percent of the value of goods from the date of FDI receipt.
- Single-brand retail companies can also undertake e-commerce business, not allowed at present.
- FDI means Foreign Direct Investment (FDI)
- It is a controlling ownership in a business enterprise in one country by an entity based in another country.
What is FDI?
FDI vs Portfolio Foreign Investment
Foreign direct investment is distinguished from portfolio foreign investment, a passive investment in the securities of another country such as public stocks and bonds, by the element of “control”.
